Analysis and Reference of the Profit Structure of MTR

Abstract

As the backbone of urban public transport, metro has a great promoting effect on the development of social economy. However, most metro companies suffer losses in the world. With the expansion of business scope, the diversification of business types and increased profit channels, MTR has become one of the models of the global railway operation industry. To refer to MTR's management experience, and explore its key business to realize profit and its practical lessons, it’s necessary to analyze the profit structure of MTR from 2012 to 2014. According to characteristic of MTR business, the profit structure is reconstructed as three major business sectors: passenger transport and its related business, property and its related business, and other business, and the profit structure from 2012 to 2014 is analyzed from total profit constitution and profit source structure. The results show that MTR’s profit source structure is highly consistent with its business model “Railway + Property”, its passenger transport and property all have strong profitability and each accounting for half of the total profit. For the metro enterprises in mainland China, it should adhere to the development pattern of “Metro + Property” and give full play to the linkage effect of metro and property development, so as to achieve self-sustainable development. It should not only manage well passenger transport and its related businesses, but also manage well property and its related businesses. At the same time, it is also of great significance to explore the flexible fare adjustment mechanism, control and reduce the cost of passenger transport and innovate the valuation model of investment property, etc.